Short-Term and Long-Term Planning While Considering Operating and Capital Tradeoffs
Clinton P. Carter Senior Vice President for Finance and Stephanie Pianka Administration, Chief Financial Officer, Senior Vice President for Finance and Budget The University of North Carolina System and Chief Financial Officer, New York University
Richard Petillo Jon K. Speare Chief Financial Officer Executive Director Clemson University The Treasury Institute for Higher Education
Monday, July 27, 2020 500,000+ 60,000+ 19,000+ #1 alumni from over students faculty and staff studying abroad 183 countries
17 Schools and
3 degree Founded 1831 $13B+ #29 $4B+ consolidated granting campuses U.S. News & World endowment revenues worldwide Best Colleges Private National Association of College of College Officers Association University and Business National
Source: NYU At A Glance, consolidated revenues include NYU Langone Health, students study abroad source IIE 2 NYU is highly dependent on tuition .. with budgeted FY20 operating revenues of $3.5B National Association of College of College Officers Association University and Business National ¹ FY20 Plan - Includes portal campuses, excludes NYU Langone Health System 3 NYU’s Teaching & Learning Global Footprint #1 Study Abroad • Ranked #1 among all US universities by the Institute of International Education for sending students to study abroad for the 17th year in a row • 46% of bachelor’s degree recipients in the Class of 2018 studied away at least once
Portal Campus
Receives Liberal Studies Freshmen
NYU London NYU Paris Global Study Away Site
NYU Berlin
NYU New York NYU Madrid NYU Prague
NYU Abu Dhabi NYU Shanghai NYU Los Angeles
NYU Florence NYU Washington, DC
NYU Tel Aviv NYU Buenos Aires NYU Sydney
NYU Accra National Association of College of College Officers Association University and Business National 4 Source: NYU Office of Global Programs on web for more information As the epidemic evolved, the impact and uncertainties increased
February: March: April: 2/1: Shanghai campus moves to remote education 3/11: Move to remote instruction Emergency grants and aid to students and some students are unable to get back to NYU- 3/16: All study abroad sites close 4/4: Announce prorated School Based Fee refunds NY 3/27: CARES Act announced 4/11: Summer I & II move to remote instruction; 2/27: Florence site closes Major Financial Implications: Housing facilities will remain vacant Potential FY20 Exposure: $5M-$10M • Refunds for Spring Housing and Dining • Costs to get students back home safely Potential FY20 Exposure: $150M+ before mitigations • Costs to enable remote instruction on a large scale • Packing & shipping students’ belongings Summer enrollment levels and Fall operations • Fundraising slowdown and enrollment levels uncertain • Lost Revenue from Student Health Center and College of Dentistry Clinic Potential FY20 Exposure: $100M+
University's operating budget contingency sufficient 3/20: Expense Management Plan announced: - FY21 Annual Merit Increase Cancelled to cover the impact • Administrative Hiring Pause, Faculty Hiring Review • Discretionary Spending Freeze • Pause on Capital Projects
People and Mission First • Keeping all employees on paid status is a top priority • Provide Faculty and Staff necessary support to teach or work remotely • Extend Tenure Clock one year • Exempt COVID-related leave from sick day count
• Support Students – Emergency grant funding, continued employment where possible, flexibility for housing and other support of College Officers Association University and Business National 5 Clemson At a Glance #27 $104M PUBLIC RESEARCH UNIVERSITY EXPENDITURES U.S. News & World Report ’19 research awards totaled $150M 25,822 R1 STUDENTS CARNEGIE 20,000+ undergraduate students Clemson is recognized as 5,500+ graduate students an economic engine creating 130+ degree programs prosperity in entire regions. National Association of College of College Officers Association University and Business National 6 Finances at a Glance (FY19) $1.18BN Total Revenues
$425MM $136MM Tuition & Fees (Net) State Appropriations
$145MM $91MM Athletics Revenues Auxiliary Revenues National Association of College of College Officers Association University and Business National 7 COVID-19 FY20 Impacts
Total Projected Changes ($000s) (12,494)
Revenue Impacts $(000’s) Auxiliary Refunds (16,815) Reduced Athletics Revenues (3,618) E&G Refunds , incl. Study Abroad (1,624) Subtotal Revenue Impacts (22,057)
Expense Impacts $(000’s) Additional IT Expenses 1,164 Study Abroad Reimbursements 234 Business Continuity Operations 525 Reduced Athletics Expenses (2,795) Procurement Restrictions (4,184) Travel Restrictions (2,612) Hiring Restrictions (1,895) Subtotal Expense Impacts (9,563)
Net Projected Impacts to FY20 ($12,494)
CARES Act Allocation $13,580 CARES Act Grants Paid ($6,774) National Association of College of College Officers Association University and Business National 8 University of North Carolina System
17 245,000 67,000 $11.2 Bn $6,449 Avg. Institutions Students Employees Budget Tuition & Fees National Association of College of College Officers Association University and Business National 9 COVID-19 FY20 Impacts Incurred Costs and Losses Student Reimbursements $ 118,000,000 • UNC System as a whole - CARES Housing, Dining and Parking monies largely offset UNC Shifts to Online Instruction & Telework $ 26,000,000 expenses during Spring 2020 IT Infrastructure, online instruction, exam proctoring, etc. Emergency expenses (sanitation, PPE, facilities changes) • Excluding Lost Revenue $ 14,000,000 Custodial services, sanitation, PPE, Plexiglass shield installation • Fall 2020 uncertain Personnel costs, including Hazard and Leave pay $ 42,000,000 Hazard pay for mandatory employees, Leave pay, etc. • Haves vs. Have-Nots… Cancellations and Other Expenses • HBCUs / Title III $ 30,000,000 Travel and event cancellations, student costs, etc. • R1s and Regional Publics Total Costs So Far (Excluding Revenue Losses) $ 230,000,000 • $118MM Housing / Dining External Funding (CARES) Reimbursements, not CARES Discretionary Funding $ 90,000,000 necessarily returning to prior HBCU Funding $ 69,000,000 fund balances… State-allocated CARES Funding $ 44,000,000 • NC colors of money Governor-allocated CARES Funding $ 7,000,000 problem Total CARES Discretionary $ 210,000,000 • Excludes $90MM emergency student grants, fully funded by Anticipated impact so far $ (20,000,000) CARES National Association of College of College Officers Association University and Business National 10 FY2021 and the Impact on Capital Planning National Association of College of College Officers Association University and Business National 11 Fall 2020 Revenue Uncertainties
Scenario A: “New Normal” • Institutions reopen on relatively normal schedules, with modest safety measures and limited revenue impact • Enrollment change: From 0% to down -2% • Athletics, Housing & Dining proceed as planned • Other university areas not significantly impacted
Scenario B: “Social Distancing” • Institutions able to reopen on relatively normal schedules, with significant social distancing guidelines • Enrollment change: down -2% • Athletics proceed with significantly reduced capacity • All mandatory student fees still charged • Dining capacity significantly reduced (-50%) • Modest impacts to sales and services, patient University of North Carolina School of the Arts services Winston-Salem, North Carolina National Association of College of College Officers Association University and Business National 12 Fall 2020 Revenue Uncertainties
Scenario C: “Online Fall” • All instructional activity is converted to online, No students present on campuses • Enrollment change: From 0% to down -10% • Athletic seasons cancelled • C1 Scenario – Students still pay all mandatory fees (Student Activity, Athletics, Health Services) • C2 and C3 Scenarios – Students would not be charged fees relating to on-campus enrollment • Virtually no revenues for Dining, Housing, Parking (down -90%) • “Mothball status” • Modest impact to Patient Services, Research & Grants • Debt service still required, draw down on reserves, transfers from other sources, eventual bleed into academics University of North Carolina at Pembroke Pembroke, North Carolina National Association of College of College Officers Association University and Business National 13 Fall 2020 Revenue Modeling
Estimated Revenue Impact “New Social Online Fall 2020 Online Fall Online Fall 2020 Normal” Distancing Enroll: -2% ∆ 2020 Scenario Planning for 2020-21 Fall 2020 Semester Only Enroll: -10% ∆ (status quo) Only + Mand. Fees Enroll: -5% ∆ Impact Percentage UNC System Annual Budget Scenario A Scenario B Scenario C1 Scenario C2 Scenario C3 A B C1 C2 C3 Anticipated Revenue Impacts Enrollment (FTE) -2.0% -2.0% -2.0% -5.0% -10.0% 219,701 (4,394) (4,394) (4,394) (10,985) (21,970) State Appropriation 0.0% 0.0% 0.0% 0.0% 0.0% $ 2,668,000,000 $ - $ - $ - $ - $ - Tuition Revenue (net) -2.0% -2.0% -2.0% -5.0% -10.0% $ 1,210,500,000 $(24,210,000) $ (24,210,000) $ (24,210,000) $ (60,525,000) $ (121,050,000) Student Fees (net) -2.0% -2.0% -2.0% -40.6% -43.8% $ 598,500,000 $(11,970,000) $ (11,970,000) $ (11,970,000) $ (243,140,625) $ (261,843,750) Financial Aid (external) -2.0% -2.0% -2.0% -5.0% -10.0% $ 706,000,000 $(14,120,000) $ (14,120,000) $ (14,120,000) $ (35,300,000) $ (70,600,000) Athletics (less fees) 0.0% -25.0% -50.0% -50.0% -50.0% $ 245,800,000 $ - $ (61,450,000) $ (122,900,000) $ (122,900,000) $ (122,900,000) Housing (net) 0.0% 0.0% -45.2% -45.5% -46.0% $ 305,500,000 $ - $ - $ (138,086,000) $ (139,002,500) $ (140,530,000) Dining (net) 0.0% -25.0% -45.2% -45.5% -46.0% $ 201,500,000 $ - $ (50,375,000) $ (91,078,000) $ (91,682,500) $ (92,690,000) Parking 0.0% 0.0% -45.2% -45.5% -46.0% $ 53,500,000 $ - $ - $ (24,182,000) $ (24,342,500) $ (24,610,000) Sales, Services, & Other Aux. 0.0% -15.0% -30.0% -30.0% -30.0% $ 483,300,000 $ - $ (72,495,000) $ (144,990,000) $ (144,990,000) $ (144,990,000) Patient Services 0.0% -5.0% -5.0% -5.0% -5.0% $ 720,000,000 $ - $ (36,000,000) $ (36,000,000) $ (36,000,000) $ (36,000,000) Research & Grants 0.0% 0.0% -5.0% -5.0% -5.0% $ 1,410,400,000 $ - $ - $ (70,520,000) $ (70,520,000) $ (70,520,000) Gifts & Investments 0.0% 0.0% 0.0% 0.0% 0.0% $ 1,023,500,000 $ - $ - $ - $ - $ - Total Revenue $ 9,626,500,000 $(50,300,000) $ (270,620,000) $ (678,056,000) $ (968,403,125) $ (1,085,733,750) Percent Change 100% -0.5% -2.8% -7.0% -10.1% -11.3% National Association of College of College Officers Association University and Business National 14 Expense Control Measures
Primary Strategies • Discretionary Spending • Reductions in Travel, Supplies, Contracted Services, etc.) • Reductions in financial aid • Personnel • No FY21 merit increases • Hiring and promotion freezes; Reduction of staff hours where possible • Furlough staff (auxiliaries, academic) • Faculty course release reductions • Cut probationary employees • Consolidate Administrative functions • Delay investments • Delay scheduled replacements • IT, furniture, equipment, etc. • Delay non-critical capital projects and deferred maintenance Appalachian State University Boone, North Carolina National Association of College of College Officers Association University and Business National 15 Expense Control Measures
“Worst Case” Strategies • Personnel
o Consolidation of administrative functions and services at System level
o Consider 9 or 10-mo contracts for student focused positions
o Adjust faculty teaching load o Rely more heavily on adjunct professors • Program reductions
o Closure of student service centers o Elimination of certain athletics programs o Discontinue unfunded research o Adjust academic program mix o Outsource non-core activities o Insource student fee-funded activities o Significant financial aid reductions o Reduce physical footprint (consolidate buildings) University of North Carolina at Chapel Hill Chapel Hill, North Carolina National Association of College of College Officers Association University and Business National 16 FY21 Uncertainties
Revenues • Enrollment impacts • State appropriations • Auxiliary revenues • Athletic revenues • Fundraising • Research Expenses • Medical Care • Testing and tracing • Isolation and Quarantine • Physical Distancing • Hybrid Learning Environment • PPE & Cleaning Supplies • Labor (incl. lost productivity) National Association of College of College Officers Association University and Business National 17 Expense Control Measures Personnel • $7.6mm in frozen hires in the pipeline (127 positions)
Procurement • Average weekly spend pre-COVID $6.0mm • Average weekly spend since COVID $3.5mm
Travel • $2.7mm in remaining FY20 travel budgets frozen
Capital Projects • $325mm in facilities project pipeline pre-COVID • $181mm in facility projects frozen, $31mm non-capital projects
Athletics
• $2.8mm in estimated expenditure reductions of College Officers Association University and Business National 18 18 Capital and Operating Budget Modeling ILLUSTRATIVE National Association of College of College Officers Association University and Business National 19 Program Prioritization National Association of College of College Officers Association University and Business National 20 Program Prioritization National Association of College of College Officers Association University and Business National 21 FY21 “Go Local” Plan for Fall 2020 semester: • With Study Away Canceled for the Fall, NYU is using is Global Footprint to allow students to study at the NYU campus closest to their home • For undergraduates who may not be able to travel to their home campus this fall. To be eligible for Go Local at any NYU location, students must be able to live and study in that country for the duration of the semester without the issuance of a student visa. • Students who meet certain requirements may enroll and take a number of in-person classes at another NYU location, provided that the location opens, that students can safely travel there from surrounding areas, and that there is available space.
Est. Highest Number of “GoLocal” participants
NYU London NYU Paris
NYU Berlin
NYU New York NYU Madrid NYU Prague
NYU Los Angeles NYU Abu Dhabi NYU Shanghai
NYU Florence NYU Buenos Aires
NYU Tel Aviv NYU Washington, DC NYU Accra NYU Sydney
Estimated 3000+ Students May Take Advantage of “Go Local” of College Officers Association University and Business National Source: NYU Office of Global Programs on web for more information 22 FY20/21 Capital Planning:
• One third of ten-year capital plan put on “pause” with the goal of preserving liquidity while retaining critical academic and infrastructure investments • Projects will be reevaluated and reprioritized when situation stabilizes • 40% of capital plan funding remains for four strategic academic and infrastructure projects where the majority of costs have already been funded • IT security and technology enhancements for classrooms and remote learning receiving incremental funding • Capital replacement and IT refresh investments retained in the ten year capital plan National Association of College of College Officers Association University and Business National 23 FY20/21 Near Term Financial Planning:
Continue Implement Progress Update
Monitoring Weekly KPIs: Next level of mitigation Operation “NYU Returns” University Leadership, • Fall enrollment levels actions as necessary - academic and Finance Committee of based on trigger points: operational programs Board & Other • Expense mitigation Stakeholders Regularly monitoring dashboard - Enrollment - quantify costs measures results - NYS and NYC Guidelines • Liquidity School and Unit Planning Retain investments in - FY21 baseline budgets FY21 budget for strategic academic programs - Moderate and more severe scenarios National Association of College of College Officers Association University and Business National 24 Role of the CFO’s team: Strategic: Operational:
• Provide rigorous, objective • Implement and monitor analytical tools to enable expense mitigation actions decisions • Exception request handling • “Connect the dots” between academic and administrative • Remote working expense planning and budgetary impacts, policies provide data required to make quick decisions • Create and operationalize imperfect budgets for FY21 • Program prioritization with University leadership and other • Budget management for new stakeholders COVID-related expenditures: • PPE, temporary space, • Lead efforts to maintain and fund testing, etc. investment in strategic initiatives • Compliance and controls for • Scenario planning with impacts CARES act implementation and identified for operating and new remote work practices
capital plans of College Officers Association University and Business National 25 Short-Term and Long-Term Planning While Considering Operating and Capital Tradeoffs
Clinton P. Carter Senior Vice President for Finance and Stephanie Pianka Administration, Chief Financial Officer, Senior Vice President for Finance and Budget The University of North Carolina System and Chief Financial Officer, New York University
Richard Petillo Jon K. Speare Chief Financial Officer Executive Director Clemson University The Treasury Institute for Higher Education
Monday, July 27, 2020